In the discussion thread: Brookings Institute: Romney Tax plan raises taxes on 95% (major issue) [View all]
Response to WI_DEM (Original post)
Wed Aug 1, 2012, 02:17 PM
hfojvt (35,686 posts)
9. I was ready to applaud this
until the nonsense about how the mortgage interest deduction "benefits the middle class"
Yeah, right. http://journals.democraticunderground.com/hfojvt/151
36.5 million tax returns took a mortgage interest deduction in 2009. That's out of 140 miillion returns. The mortgage deductions were worth $420 billion. Of that amount 47% went to those with incomes over $100,000. A group that is only 12% of tax filers. The TOP 12% of tax filers.
There were 29.5 million filers in the middle class - those with AGI between $40,000 and $75,000. Of that group only 10.6 million took a mortgage interest deduction - less than 36%.
And 42% of the itemizers were in the $60,000 - $75,000 part of that group.
40% of filers in the $50,000 - $75,000 range took a mortgage interest deduction whereas only 28% did in the $40 - 50,000 range.
And 67% took a mortgage interest deduction in the $1,000,000 to $1,500,000 range.
Their average deduction was worth $31,569 whereas the average deduction for the $60,000 - $75,000 group was $9,738.
Things like the mortgage interest deduction are simply worth much more to a much greater percentage of people - at the top. The middle class, and the country, would be better served by eliminating them, eliminating the extra work in tracking them and filling out the extra form - and just increasing the standard deduction.
The deduction for state and local taxes was worth $15.5 billion to those with incomes over $10,000,000. That's 8,057 filers.
Meanwhile, it was only worth $4.8 billion to the 3.4 million filers with income between $30,000 and $40,000. 76% of filers with incomes between $30 and $40k did NOT itemize whereas 97% of those with income over $10 million DID itemize for state and local taxes.
Tell me again, how that is a break that benefits the middle class. It benefits 97% of the super-rich by an average of $1.9 million and only 24% of those making under $40,000 (and over $30,000) by an average of $1,412.
edit - and that does not even include multiplying the bigger number by the HIGHER marginal tax rate and the smaller number by the LOWER marginal tax rate. Because the richer person pays a 35% (should be 55%, if I had my druthers) and the middle class person pays a 15% tax rate. The rich person's deduction is worth $665,000 and the middle class person's deduction is worth $212.
AND when you figure that an itemized deduction is only worth something to a taxpayer of the amount OVER the standard deduction of $10,900 for a couple (in 2008). Well, the rich person has already saved $661,000 in taxes while the middle class person hasn't saved anything until they come up with another $9,500 in deductions
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I was ready to applaud this
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